In an effort to maintain your property, hiring professional services and supplies is a must! These services and supplies require expenditures. In order to run a smooth financial operation and participate in smart-spending, your Board needs to assess what services and supplies are needed, how much your budget allows for, and match it with the best price for the necessary quality of services and supplies.
Bidding can be compared to going to another doctor for a second opinion. In the case of servicing and supplying your property, your Board should almost always be calling on multiple companies that can cater to that one service or supply that’s needed. How many of you have a “Preferred Vendor List”? This will help your company select vendors that are responsible and cost effective.
Have you ever selected a vendor with the lowest bid and been disappointed with its services or supplies? Maybe the lowest bidder isn’t the way to go. You could utilize the RFP (Request for Proposals) process which will help get you the best performance and supplies at a competitive price.
First, think of the expenses for these services and supplies because, often times, they are different. These differences are recurring and non-recurring expenses, and the bidding for these has its disparities as well.
Recurring expenses for services should be bid out periodically by the Board- usually every year (though this can be hard for a volunteer board). Annual bidding is also highly recommended for recurring suppliers. On the other hand, non-recurring expenses for services should be bid out only when the quote for the service is over-budget. However, it is recommended that your Board should seek out multiple proposal requirements anyway. If non-recurring suppliers are over the set apportionment amount, it’s time for your Board to get that second opinion (and a third, fourth, and fifth) as it’s important to establish a minimum number of bidders. Also, play it safe- get every detailed quote in writing!
But wait, the bidding process isn’t over just yet! Once each bid is presented to the Board in its sealed envelope or package (hence the term “sealed bid”), it’s extremely important to have all aspects of the opening process documented such as a specific attendance sheet of the Board members (also make sure that there’s the required amount of members present at the opening of the sealed bids) and a Bid Control Sheet (the reason for the decision on the chosen vendor).
Please note that there are exceptions to the rules about bidding when the need for a service or a supply is an emergency, the required professional services are of a confidential nature, or when there is absolutely no possibility of competition for a given service or supply.
To protect the property’s objectives and demonstrate stellar operational practices within the Board, it’s very important to monitor and control these processes by documenting them in a written policies and procedures manual, a schedule, and/or a checklist. This will preserve a set way of your Board’s activities and practices while improving the quality of your property, minimizing costs, and enhancing Board accountability.
I guarantee that your Board will get the very best financial results!